Natural Capital

Natural capital refers to land-based investments and natural assets - such as forests, farmland and ecosystems - that generate long-term economic value through environmental services. These include carbon sequestration, sustainable timber production, biodiversity enhancement and responsible land use. 

At Foresight, natural capital is treated as a real assets investment strategy, where active management of land and ecosystems is used to deliver both financial returns and measurable environmental outcomes over the long term.

Foresight’s Natural Capital strategy invests in land-based assets and projects across areas such as afforestation, sustainable forestry, regenerative agriculture and biodiversity-led land use. 

These investments typically involve the creation, restoration or active management of natural assets, including planting new forests, improving land productivity and developing habitats that support biodiversity and ecosystem services. 

Through active management, these assets are positioned to generate value from a range of sources, including afforestation, timber harvesting, land appreciation, carbon credits and biodiversity net gain opportunities, while delivering long-term environmental benefits.

Natural capital investments generate returns through a combination of income, capital growth and ecosystem service revenues, depending on the asset type and market conditions. 

Key sources of return include sustainable timber production, land value appreciation and long-term revenue streams from environmental markets, such as carbon credits and biodiversity net gain units. In some cases, additional income may be derived from activities linked to improved land use and ecosystem services. 

Because these assets are actively managed over the long term, returns are typically driven by the creation of forests, biological growth of mature forestry (e.g. timber) and increasing demand for environmental assets, creating multiple, diversified sources of value.

Biodiversity net gain (BNG) is a UK regulatory framework that requires new developments to deliver a measurable increase in biodiversity, leaving habitats in a better condition than before. 

This creates growing demand for habitat creation and restoration projects, where landowners and investors can generate and sell biodiversity net gain units to developers. As a result, BNG has become an important revenue stream within natural capital investment strategies. 

For investors, biodiversity net gain provides exposure to environmental markets linked to land use, while contributing to nature recovery and long-term ecosystem resilience.

Afforestation - the planting of new forests on previously non-forested land - is a core component of natural capital strategies because it generates long-term environmental and financial value. 

New forests support carbon sequestration, biodiversity enhancement and sustainable timber production, while also contributing to land value creation over time. As trees grow, they can generate multiple revenue streams, including timber income and carbon credits, alongside potential exposure to biodiversity markets. 

Afforestation also aligns with climate and nature-positive policy frameworks, particularly in the UK and Europe, where demand for carbon removal and ecosystem restoration is increasing. This combination of biological growth and policy support makes afforestation a key driver of long-term returns within natural capital investing.

Natural capital sits within private markets as a real assets investment strategy, providing exposure to land-based assets such as forests, farmland and ecosystems. Natural capital also fits into Impact allocations.  

It is typically positioned alongside other private market allocations like infrastructure and real estate, but with distinct return drivers, including biological growth, land value appreciation and environmental markets such as carbon credits and biodiversity net gain. 

For investors, natural capital can offer diversification benefits, with performance that is less correlated to traditional asset classes like equities and bonds, while also providing exposure to long-term sustainability and climate-related themes.